Bitcoin is a virtual currency with no ties to a central bank. Bitcoin has been gaining popularity as an alternative way of doing business online, and several websites have sprung up that allow people to pay for things with Bitcoin instead of cash or credit.
You can then exchange your Bitcoin for dollars, euros, or other currencies by “selling” them to someone who wants Bitcoin in return at the current going rate on one site. The whole process costs almost nothing, but you have to be very careful whom you deal with so as not to get ripped off. Meta Profit is considered as one of the most authentic bitcoin trading platforms that are helping many bitcoin traders.
For example, using Bitcoin to buy a product from a company that’s experienced with Bitcoin takes too long because most companies will immediately ask if you used Coinbase or Bitpay. This is inconvenient because these companies make Bitcoin purchasing complicated and slow. For Bitcoin to be a secure and practical currency, Bitcoin users need faster Bitcoin transactions for purchases and Bitcoin exchanges to convert Bitcoin into a legal tender (dollars or other hard currencies) and back again.
A Bitcoin wallet is the first step to using Bitcoin. It allows you to receive Bitcoins, store them, then send them to others. You can get one free from Blockchain Info. A Bitcoin wallet also generates your first Bitcoin address, something like an email address that people can use to contact you with Bitcoin transactions (sending you money). Be aware of the most common scam in bitcoin: Someone sends your bitcoin address some bitcoins… but they aren’t really trying to send it to you! Instead, they try to trick you into sending Bitcoin back to them, so they get their Bitcoin free. It’s a trick repeated by Bitcoin scammers everywhere on the internet.
That’s why it’s important to only use Bitcoin addresses for Bitcoin transactions when dealing with Bitcoin at all. Even if someone knows your Bitcoin address, there is no way they can access your bank account or identity just from that single fact alone. If they need money from you urgently, there are much faster ways of scamming people that don’t even require knowing their Bitcoin address first!
Bitcoin exchanges are websites where Bitcoin can be bought or sold for any number of different currencies. Bitcoin is a relatively new phenomenon in human history, so there are very few countries that have Bitcoin as their national currency. Bitcoin is often traded on Bitcoin exchanges against US Dollars or another form of Government-issued fiat currencies like Euros, Yen, etc… Bitcoin never sleeps and Bitcoin markets open up around the clock (24/7).
Many Bitcoin exchanges exist outside the US and offer far better liquidity than the ones found locally. This makes it possible to buy or sell large amounts of Bitcoin at prices way below the average market rate. I will give you some examples of good Bitcoin trading sites below, but first I’ll explain what exchange does…
In Bitcoin, there are public addresses and private keys. A Bitcoin address is a string of 27-34 alphanumeric characters starting with 1 or 3 that represents where money should be sent to and/or where Bitcoin can be sent from. Think of it as an email address. The Bitcoin currency is essentially just a big ledger that keeps track of all Bitcoin transactions and stores them in encrypted blocks on the chain for eternity (to prevent tampering). When Bitcoin is transferred, the sender uses his private key to sign a message with the input (source) amount and output (destination) amount.
Only the holder of the private key associated with said Bitcoin address can digitally “sign” for it through cryptographic signature verification algorithms, which provide security for Bitcoin wallets. Bitcoin wallets are simply software that stores Bitcoin addresses and private keys, just like a regular wallet would store credit cards or cash. Bitcoin wallets vary widely in functionality but typically they contain two elements – one that generates the Bitcoin address itself (like an email application), which is used to send Bitcoin from this particular wallet, and another element containing the actual Bitcoin private key which is used by the owner to make Bitcoin transactions.
Conclusion
This method allows for extremely secure storage of Bitcoins without ever exposing the private key. It also means that each Bitcoin address should only be used for a single transaction. There are no “backups” of Bitcoin wallets since these Bitcoin addresses are impossible to guess, so there is no way your money can be stolen if you lose them.
Interesting Related Article: “Bitcoin wallets – How to pick the most appropriate wallet?“
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